Nalcor undeterred by Quebec court loss

Will appeal decision in Upper Churchill good faith case

James McLeod
Published on July 26, 2014
Ed Martin

Taxpayers are on the hook for $4 million in legal costs for a Quebec court challenge, and that number could keep climbing.

The provincial government was handed a major legal setback this week, when a Quebec judge dismissed the good faith court case to redress the 1969 Churchill Falls hydro contract.

But Nalcor CEO Ed Martin said that he’s already looking to appeal the ruling, and Premier Tom Marshall said the stakes are too big for the government to back away now.

Martin said the dollar figure is between $300 million and $600 million per year.

This week, a Quebec judge issued a lengthy ruling against the Churchill Falls Labrador Corp. (CFLCo) — which is majority owned by the Newfoundland and Labrador government.

The government argued that the 1969 electricity contract between CFLCo and Hydro-Québec needs to be revised because it’s so lopsided in favour of Quebec.

Judge Joel Silcoff dismissed that argument.

Essentially, Silcoff found that back in the 1960s, Brinco, which was developing the project, wanted low risk and high certainty. Because Hydro-Québec bore most of the risk, Silcoff said, it stood to benefit disproportionately.

“CFLCo and Hydro-Québec got what they bargained for,” he wrote in his ruling.

As for the Newfoundland and Labrador argument about good faith, the judge referred to “newly identified and creative legal theories” on the part of CFLCo, but said that at its core, they were arguing essentially the same thing that the Newfoundland and Labrador government has complained about since the 1970s.

Speaking to reporters Friday morning, Martin rattled off a list of legal experts in Quebec who have said that Nalcor has a valid legal case, and he said the judge never directly addressed the good faith argument.

He said that when the court case started, Nalcor anticipated that no matter which way the ruling went, the loser would almost certainly appeal.

Ultimately, he said, it could go all the way to the Supreme Court of Canada.

Liberal Leader Dwight Ball said that he can understand why the government would go that way.

Ball said he hasn’t seen the legal case, and he can’t say for sure that he would have taken it to court, but now that it’s there, it makes sense to keep pushing.

“As a matter of principle, when you’re prepared to take anything or anyone to court, you may as well be prepared, if you’re willing to start it you’d better be prepared to finish it,” Ball said.

Meanwhile, almost immediately after Martin announced that Nalcor is planning to appeal, New Democrat Leader Lorraine Michael took to Twitter to voice her disappointment.

“More of the people’s money going down the drain,” Michael wrote.

She said that the court case is motivated more by politics than anything else.

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